Environmental groups have a tough time getting Congress to do what they want. Case in point: In the early months of 2010, the Sierra Club, the Natural Resources Defense Council, and the Environmental Defense Fund waged an all-out campaign urging the Senate to pass a sweeping climate-change bill backed by President Obama and leaders in the Democratic-controlled Senate. The measure crashed and burned that summer.

But the green groups—and Obama’s top environmental officials—knew they could resort to a different tactic: lawsuits to compel executive action. Toward the end of George W. Bush’s administration, the three big environmental organizations and 11 states sued to force the Environmental Protection Agency to issue new regulations reining in carbon pollution from coal-fired power plants and oil refineries. The Bush EPA fought the suit, but the Obama EPA, full of top officials who had worked in these very nonprofits, took a different tack. By December 2010, after the failure of the climate-change legislation, Obama’s first-term EPA administrator, Lisa Jackson, settled the lawsuit—on the advocates’ terms. The settlement obliged the agency to begin regulating carbon pollution from coal plants and oil refineries, an outcome with profound environmental and economic implications. And in April 2012, EPA proposed a historic new rule to regulate global-warming pollution from coal plants. As Obama’s second term unfolds, the agency is expected to finalize more rules that, thanks to lawsuits, will give the green groups what they want.

The climate-change settlement is just one in a series of recent so-called sue-and-settle agreements since Obama took office. Between 2009 and 2012, EPA has settled at least 60 lawsuits from outside groups, leading to dozens of new environmental regulations. A 2010 deal in another Sierra Club lawsuit led to a 2012 regulation on mercury emissions from coal plants. A 2009 settlement with environmentalists led to a 2012 regulation governing pollution from cement manufacturers. While EPA could fight the suits, they often line up with the administration’s agenda—to fight climate change and promote clean-air laws—so why bother? In many cases, the federal government, as the loser in the legal settlements, has then paid the green groups’ legal fees.

Sue-and-settle lawsuits with like-minded groups as a way to advance common goals aren’t new. The practice dates back to the Carter administration. But EPA’s recent spate of agreements that have major environmental and economic consequences have come as part of a broader flexing of executive authority, particularly on the issue of climate change. Although Congress remains unlikely to act on the issue, the president vows to use what power he has to address a problem he sees as urgent.

The EPA cases are spurring a big backlash from industry and from Republicans on Capitol Hill. In May, the U.S. Chamber of Commerce released a report (“Sue and Settle: Regulating Behind Closed Doors”) slamming the practice. Last week, the GOP-controlled House Judiciary Committee held an investigative hearing, calling the report’s author, William Kovacs, the U.S. chamber’s senior vice president of environmental regulation, as a star witness. Kovacs told Congress the sue-and-settle process gives outside groups an outsized, backdoor role in driving the government regulatory agenda. They turn an independent agency into “an actor subservient to the binding terms of settlement agreements,” Kovacs said. House Republicans have introduced legislation to curb the practice.

Environmental groups contend they are merely forcing the administration to follow the letter of the law when it’s politically inconvenient to do so. Outside groups can’t sue EPA to create or issue new regulations; most of the sue-and-settle cases compel the agency to issue regulations for which it has already missed a statutory deadline. But in the settlement of the climate-change suit, advocates forced EPA to regulate greenhouse gases from oil refineries, which it might not have done on its own, according to both industry and green groups. “There were just as many sue-and-settlements in other administrations. What has increased is the significance,” says Roger Martella, EPA’s general counsel during the George W. Bush administration. “These are economywide mega-rule-makings ... as opposed to small settlements impacting only a limited issue.”

These cases are “very powerful, because early Congresses saw the wisdom of giving ordinary citizens the ability to enforce the law, even if administrations were unwilling to,” says John Walke, a lawyer with the Natural Resources Defense Council who has worked on many of the recent sue-and-settle agreements. “They’re occupying a political vacuum … a space created by an utterly dysfunctional Congress.” Walke says that when an agency agrees to settle a lawsuit with an outside group rather than fighting it, “there’s a meeting of the minds as to what the law requires.”

EPA contends that by quickly settling the lawsuits instead of fighting them, it saves money. According to data the agency provided to National Journal, in instances where EPA paid legal costs between June 1, 2010, and Sept. 29, 2012, the average fees in cases it settled came to $42,000. The average fees in cases where the agency litigated and lost, or partially lost, came to $176,000. “If there’s a deadline required by the Clean Air Act and a lawsuit that poses a litigation risk, there’s value to the public and the government in settling out of court,” says an EPA official who spoke on condition of anonymity. “A settlement can save taxpayers a lot of money.”

Ironically, the one point on which all sides—environmentalists, business interests, and EPA—agree is that they’d prefer to see environmental policy move through Congress rather than through court filings or the backrooms of an executive agency. But as long as Capitol Hill remains gridlocked, expect recourse to come from the legal system.

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